Market system
Market system is an economic system in which the prices of goods and services are determined by the interaction of buyers and sellers in a free market, rather than by central planning or government regulation. It is a system of voluntary exchange in which buyers and sellers negotiate prices without government interference. This system is based on the premise of supply and demand: that buyers and sellers will seek an equilibrium point, or market price, at which quantity supplied and quantity demanded are equal.
Types of market systems
- Command Market System: This type of market system is based on government control and government ownership of the means of production. In this system, the government decides what is produced, how it is produced, and how it is distributed.
- Traditional Market System: This is a system that relies on barter and exchange of goods and services. This system is usually found in rural or primitive societies and is based on the idea of reciprocity or mutual exchange.
- Free Market System: This is a system in which prices are determined by the interaction of buyers and sellers in a free market, and is based on the premise of supply and demand. It is a system of voluntary exchange in which buyers and sellers negotiate prices without government interference.
- Mixed Market System: This is a system that blends elements of both a free market and a command market. It is a type of market system where the government regulates the market, but does not dictate the prices of goods or services. This system allows for some flexibility in the market and allows for both private and public ownership of resources.
Examples of market systems in countries
- China: China has a mixed market system where the government has a significant level of control and ownership over the economy. It does not dictate the prices of goods and services, but does regulate the market.
- United States: The United States has a predominantly free market system where the prices of goods and services are determined by supply and demand, and the government does not intervene.
- India: India has a mixed market system where the government regulates the market and has a significant level of control and ownership over the economy. However, it does not dictate the prices of goods and services.
- Japan: Japan has a predominantly free market system where the prices of goods and services are determined by supply and demand, and the government does not intervene.
- Germany: Germany has a mixed market system where the government has a significant level of control and ownership over the economy, but does not dictate the prices of goods and services.
Impact of internet on market systems
The internet has had a major impact on market systems, by increasing the efficiency of the market and allowing for more competition and innovation. The internet has enabled buyers and sellers to negotiate prices more quickly and easily, and has made it easier for buyers to compare prices and find the best value for their money. Additionally, the internet has enabled companies to reach a larger audience, and to expand their markets beyond geographical boundaries. This has allowed for greater competition and more opportunities for businesses to innovate and create new products and services.
Evaluation of market systems
The criteria to be used are:
- Efficiency: The market system should be evaluated based on its ability to efficiently allocate resources and goods in an optimal manner.
- Competition: The market system should be evaluated based on the level of competition within the system, and whether or not it allows for innovation and progress.
- Stability: The market system should be evaluated based on its ability to remain stable in the face of external factors such as economic downturns or shifts in demand.
- Equity: The market system should be evaluated based on its ability to produce equitable outcomes, and whether or not it is fair to all participants.
- Accessibility: The market system should be evaluated based on its ability to enable access to goods and services for all members of society, regardless of their economic status.
The most efficient market system is the free market system, where prices are determined by the interaction of buyers and sellers in a free market, and is based on the premise of supply and demand. This system allows for competition and innovation, and is more efficient than other market systems because it does not rely on government interference or regulation.
| Market system — recommended articles |
| Free market system — Command economy vs market economy — Currency Convertibility — Open economy — Centrally planned economy — Economic forces — Factors affecting supply — Competitive equilibrium — Importance of international business |
References
- Giesler, M., & Fischer, E. (2017). Market system dynamics. Marketing Theory, 17(1), 3-8.
- Press, M., & Arnould, E. J. (2009). Constraints on sustainable energy consumption: market system and public policy challenges and opportunities. Journal of Public Policy & Marketing, 28(1), 102-113.
- Vadlamudi, S. (2021). The economics of internet of things: An information market system. Asian Business Review, 11(1), 35-40.
